2016 (12) TMI 995 - AT - Service Tax

Scope of tour operators service - retrospective amendment and its extent - section 65(105)(n) of Finance Act, 1994 - whether tourist vehicles are eligible for the benefit of the retrospective exemption? - Held that - the intent to accord parity to public and private point-to-point operations was embodied in exemption notification no. 20/2009-ST. On reference from operators, the distinction between tourist vehicles and contract carriages performing the same activity as state-run undertakings was eliminated by a corrigendum circular. Consequently, we find no difficulty in holding that, for the purpose of exclusion from tax, vehicles used by service providers is also to be so construed - appellant-assessee is entitled to exemption of tax on collections generated from use of tourist buses for passengers other than tour etc. The impugned order has quantified the collection from conducted tour, charter etc as ₹ 91,21,825 for 2006-07 on which tax of ₹ 4,46,605 has been determined. The remaining amount confirmed in impugned order pertains to use of tourist vehicles and does not sustain - penalty confirmed - appeal disposed off - decided partly in favor of appellant-assessee.

Summary

Issues: Scope of retrospective exclusion from tax under section 65(105)(n) of Finance Act, 1994 for tour operators rendering specific services post enactment of section 75 of Finance Act, 2011.

Analysis:
1. Background and Dispute: The dispute revolved around the taxability of services provided by a tour operator under section 65(105)(n) of Finance Act, 1994. The appellant, M/s Benzy Travels, faced demands for alleged non-payment of tax for the periods 2001-01 to 2006-07. The impugned order confirmed demands issued by the Commissioner of Service Tax, Mumbai-II.

2. Changes in Definitions and Notifications: The definition of 'tour operator' has evolved over time, and various notifications, including notification no. 20/2009-ST, have been issued to provide abatements and exclusions. The crucial notification exempted specific services provided by tour operators with contract carriage permits from service tax leviable under section 66 of the Finance Act, 1994.

3. Retrospective Legislation and Exemption: Section 75 of Finance Act, 2011, accorded retrospective effect to the exemption granted in 2009. The adjudicating Commissioner considered this retrospective legislation and restricted the tax demand after segregating receipts. The Commissioner excluded collections related to contract carriage permits but included collections from tours to holy places, excursions, school trips, and marriage functions.

4. Appellant's Argument: M/s Benzy Travels contended that 'tourist vehicles' were eligible for retrospective exemption based on the original notification and a clarificatory corrigendum issued in 2009. The appellant disputed the Commissioner's findings and the treatment of collections from 'tourist vehicles.'

5. Revenue's Appeal: The Revenue challenged the Commissioner's reliance on a Chartered Accountant's certificate, claiming discrepancies in the details provided by the appellant. The Revenue also contested the absence of penalties imposed by the Commissioner.

6. Court's Observations and Decision: The Court noted the complexities in taxing tour operator services, considering the Motor Vehicles Act, 1988, and differing state transport policies. The retrospective legislation and notifications aimed to align public and private bus services. The Court held that 'tourist vehicles' were entitled to exemption from tax, rejecting Revenue's appeal for re-quantification.

7. Final Decision: The Court confirmed a tax amount for 2006-07 and imposed penalties under section 76 of Finance Act, 1994 on M/s Benzy Travels. The impugned order was modified, and the Revenue's appeal was disposed of accordingly.